Sony will sell every PS4 at a loss, but easily recoup it in games, PS Plus sales

Masayasu Ito, Sony Computer Entertainment senior vice president, has admitted that for every PS4 console sold, Sony will be losing money. In other words, the cost of manufacturing and shipping the console costs more than the retail price. However, the loss is not going to be that great, and the company believes it will easily make the money back from the sales of games and PlayStation Plus subscriptions alongside the hardware.

Sony isn’t saying how much of a loss it will incur per console, but the loss will apparently easily be recouped after, or even during that initial hardware sale. That isn’t just because a PS Plus subscription is more important for this generation, but Ito suggested developing games for the system will cost less, too. So while games retain their $60 price point, they should cost less than PS3 games did to create, meaning higher profits per title.

If you factor in the expected three console bundles at launch, many more gamers signing up for a PS Plus annual subscription, and at least one title being sold alongside each console, you can see how Sony may break even on each initial PS4 sale. That’s a far better situation than when the PS3 launched.

For both Xbox One and PS4 there’s also more potential for greater profits from digital sales. Purchasing games directly on a console is now much more commonplace, and both machines will have access to other content purchases such as movie and TV series rentals and license purchases. It seems likely Sony and Microsoft will push digital sales harder this generation, as a $60 digital game purchase is much more profitable than the same-priced physical version.

You could also argue that by being priced higher the Xbox One is enticing PS4 owners to buy more games. The thinking will be “I can get a PS4 with two games for the price of an Xbox One” and Sony will be sure to focus in on that fact in marketing this year.